Governor of the Central Bank of Egypt (CBE) Tarek Amer said the bank intends to renew the initiative for small and medium projects for another 4 years.
The CBE launched this initiative in December 2015, and was scheduled to end on 1 January 2020.
The initiative obliges banks operating in the Egyptian market to direct at least 20% of their loan portfolios to SMEs, and the micro-projects were also included in the initiative at a later time.
According to Amer, the banks have so far pumped EGP 160bn to finance 86,000 small- and medium-sized projects, pointing out that there are many banks that have already reached the percentage set in the initiative, and there are other banks that could not meet that ratio.
Amer was speaking on Tuesday evening to DMC news channel, on the occasion of renewing his post for another four years.
During the interview, Amer stressed the importance of the decision to liberalise foreign exchange and its role in providing the foreign exchange needed to move the economy.
Amer said that while the banks operating in the Egyptian market were suffering from the scarcity of foreign exchange before the floating decision, during the three years following the flotation they exported foreign exchange in excess worth $36bn, and the balances of Egyptian banks abroad are currently reaching about $17bn.
He added that $6.5bn was paid to foreign oil companies, and about $4bn to foreign companies operating in Egypt.
He pointed out that the flotation decision also led to a decrease in Egyptian imports from $76bn to $59bn annually, and provided foreign cash for the establishment of about 77 huge projects during the past four years, along with its role in stimulating tourism and increasing its resources to the highest level in the history of Egypt, and increasing remittances of Egyptians working abroad.
According to Amer, there would have been a further improvement in the indicators of the Egyptian economy starting in 2018, had it not been for some international events, such as the trade war between America and China that led to the delay of this improvement.
He added that the CBE managed to absorb liquidity estimated at about EGP 800bn of excess liquidity with banks during the past four years, through its various tools, and at a high cost, in order to maintain high interest rates in the market to protect depositors, and to contain inflation, pointing out that the CBE now aims to gradually return this liquidity to banks to stimulate investment.
Amer stressed that Egypt’s external debt is still within the safe limits according to international standards, and that most of it is long-term, and therefore there is absolutely no concern about its rise, especially as external debt is directed to establish projects that generate a return and are not consumed without benefit.
“We do not need new money from the International Monetary Fund and we have cooperated with them only technically. The fund previously offered new financing to Egypt and it was rejected, and the confidence of international investors in the US made us promote the international bond offering by phone, instead of the tours that we were conducting abroad,” he said.
“We could not open the industry file before the availability of the infrastructure and the fuel needed to operate it, and we are seeking to finish settling the debts of 3,500 factories during the current year, and we are working with the open market system, and the era of customer imprisonment is gone forever.”
Amer indicated that the CBE receives full support from the political leadership and cabinet, and there is complete harmony between the economic group, stressing that the banking sector is solid and ready for any shocks.
According to Amer, the new banking law, which is currently being discussed by Parliament, supports corporate governance in the CBE and banks, and opens the door for the existence of specialised banks in specific sectors.